Frequently Asked Questions About Capital Credits
What Are capital credits?
Capital Credits are the retained margins left over at the end of the year at a not for profit electric cooperative. Capital credits are the most significant source of equity for most cooperatives. Capital credits are somewhat similar to the dividends that investor-owned utilities pay to their shareholders. The difference is that the Cooperative’s “shareholders” are also the people that it serves and the “dividends” (capital credits) are distributed to those member/consumers. Capital credits reflect each member’s ownership in the cooperative. It is also called patronage capital or equity capital.
How are capital credits paid?
Member-owned, not-for-profit electric utilities like Flint set their rates to bring in enough money to pay operating costs, make payments on any loans and provide an emergency reserve. At the end of each calendar year, we subtract operating expenses from the total amount of money collected during the year and this balance is the called “margin.”
How are year-end margins allocated??
These margins are allocated to member-consumers as capital credits based on their purchases from the cooperative. Member purchases may also be called patronage.
Why does a cooperative refund some capital credits?
It is one of the seven Cooperative Principles: Member Economic Participation. That principle states: Members allocate surpluses for any or all of the following purposes: developing the cooperative, possibly by setting up reserves, part of which at least would be indivisible; benefiting members in proportion to their transactions with the cooperative; and supporting other activities approved by the membership.
Does Georgia Power or Fort Valley Utilities refund capital credits?
No, capital credits only exist at not for profit electric utilities owned by their members.
How often do members receive capital credits?
The Flint Energies board of directors makes a decision each year by August whether or not to refund capital credits. When the cooperative is strong enough financially and the member equity level is high enough, the Board directs the staff to refund some portion of past year’s capital credits.
How will the refund work this year?
Inactive members who no longer purchase electricity from Flint Energies (with capital credits due) will receive a check after Sept. 15. Due to the expense involved in processing printed checks, all active members with capital credits due will see the refund as a separate line item on their September electric bill.
What if I have moved?
If you move or no longer have electric service with Flint, it is important that members keep their address current, so that future disbursements can be properly mailed. Capital credits are reserved for members even if they move out of the Flint service area. Flint will make a diligent effort to send a check by mail. See Unclaimed Capital Credits.
What is a member?
Any individual or entity that is uses electricity from Flint Energies. They are entitled to participate in cooperative elections and vote and to share in patronage capital allocations.
What does it mean to allocate capital credits?
To assign capital credits to members/patrons after the books are closed on a one-year operation of the cooperative.
What does it mean to retire capital credits?
To pay capital credits to members either through cash or credit. It’s also called revolving, rotating or redeeming capital credits.
What is a rotation period?
The period of time that capital credits are held by the cooperative before being returned to members.
How have my capital credits been used by Flint?
Prior to refunding capital credits, Flint uses member equity in place of commercial loans to help construct the Cooperative’s physical plant (poles, wires, transformers, etc.).